The broad-based US dollar will end this week on a bearish track, as lingering vaccine hopes and the likelihood of further monetary easing by the US Federal Reserve tend to undermine the US currency. Besides this, the losses in the US dollar could also be associated with the worsening coronavirus (COVID-19) conditions in the US, which keep sparking fears of an economic slowdown in the US, which is contributing to the losses in the greenback. 

Across the pond, the upbeat market mood, backed by optimism over the coronavirus vaccines, is urging investors to seek out riskier assets tied to global commodities and emerging markets. It is worth recalling that the US dollar index (DXY) faced the heaviest losses in nearly 2 weeks last week, mainly after the US House representatives backed the $ 2,000 COVID stimulus paychecks that US President Trump is demanding.

Looking ahead into the coming week, the series of Manufacturing PMI and Unemployment Claims, along with OPEC-JMMC Meetings and the minutes of the FOMC Meeting, could drive plenty of headlines to keep the markets on the move. Apart from this, the geopolitical tensions and the coronavirus headlines will also closely follow and play a key role in determining risk levels in the market.

Top Economic Events to Watch This Week

Markit Manufacturing PMI – Monday – 9:30 GMT

This data is normally published by the Chartered Institute of Purchasing & Supply and Markit Economics, which measures the economic growth of the UK manufacturing sector. It is worth mentioning that the UK service sector does not affect this, either positively or negatively. Traders want the highest possible figures, which are taken as bullish for the GBP currency. Any reading above 50 indicates industry expansion. Conversely, readings below 50 indicate contraction.

From the projected view, the data is expected to come in at 57.3, which is the same as the previous reading, and this might fail to give any meaningful impetus to the GBP currency.

Previous Release

ACTUAL: 57.3

DEV: 0.77

CONS: 55.9

DATE: 12/16/2020 09:30

2): OPEC-JMMC Meetings: – Monday – 10:00 GMT

These meetings are attended by representatives from the 13 members of OPEC and 11 other oil-rich nations. The purpose of this meeting is to coordinate and unify the petroleum policies of the Member Countries and ensure the stabilization of oil markets, in an effort to secure an efficient, economical and regular supply of petroleum to consumers.

They discuss multiple issues concerning energy markets and, most importantly, they agree on how much oil they will produce. When the meeting is over, the officials usually talk with reporters throughout the day. As a result, the formal statement on policy shifts and the objectives of the meeting is released after the meetings have been concluded.

3): US ISM Manufacturing PMI – Tuesday – 15:00 GMT :

This data normally shows business conditions in the US manufacturing sector. It is one of the leading indicators of the overall economic condition in the United States. Results above 50 are seen as positive (or bullish) for the greenback; conversely, results below 50 are seen as bearish for the currency.

From the projected view, the data is expected to drop from 57.5 to 56.6, which may not leave any major bearish impact on the USD currency, as the reading will still be above 50.

Previous Release

ACTUAL: 57.5

DEV: -0.31

CONS: 58

DATE: 12/01/2020 15:00

4): ADP Employment Change – Wednesday – 13:15

This data is normally released by Automatic Data Processing, Inc, which studies the change in the number of employed people in the US. In simple words, an i9ncrease in this indicator has a positive impact on consumer spending, which therefore stimulates economic growth. As a result, high figures are seen as positive or bullish for the greenback; conversely, low figures are seen as bearish for the US currency. According to projections, the figure is expected to drop from 307K to 75K, which could undermine the US currency.

Previous Release

ACTUAL: 307 K

DEV: -0.22

CONS: 410 K

DATE: 12/02/2020 13:15

5): FOMC Meeting Minutes – Wednesday – 19:00 GMT

The Federal Open Market Committee arranges eight meetings per year. The purpose of this meeting is to review economic and financial conditions, determine the appropriate stance of monetary policy and assess the risks to the long-term goals of price stability and sustainable economic growth. It is worth mentioning that the FOMC Minutes are normally released by the Board of Governors of the Federal Reserve, which are a clear guide to the future US interest rate policy. A hawkish tone is seen as positive or bullish for USD currency.

6): Initial Jobless Claims – Thursday – 13:30 GMT

This data is normally released by the US Department of Labor, which measures the number of people filing first-time claims for state unemployment insurance. If the figure is larger than expected, it shows weakness in the US labor market, which in turn leaves a negative impact on the strength and direction of the US economy. Conversely, low readings are seen as positive or bullish for the greenback.

Previous Release

ACTUAL: 787 K

DEV: -0.56

CONS: 833 K

DATE: 12/31/2020 13:30

7): ISM Services PMI – Thursday – 15:00 GMT

This data is normally released by the Institute for Supply Management (ISM), which measures business conditions in the US non-manufacturing sector. It is worth noting that the non-manufacturing sector has no influence, either positive or negative, compared to the GDP or ISM Manufacturing. Results above 50 are seen as positive (or bullish) for the USD. Conversely, figures below 50 are seen as bearish for the greenback. According to the forecasts, the figure is expected to drop from 55.9 to 54.5, which could undermine the US currency.

Previous Release

ACTUAL: 55.9

DEV: -0.04

CONS: 56

DATE: 12/03/2020 15:00

8): CAD – Unemployment Rate – Friday – 13:30 GMT

Statistics Canada releases this data, which measures the number of unemployed workers, divided by the total civilian labor force. It is one of the key indicators for the Canadian Economy, as the number of unemployed people is an important signal of overall economic health, because consumer spending is highly correlated to labor market conditions. If the rate goes upward, it shows a lack of expansion within the Canadian labor market. As a result, a rise in the unemployment rate leads to weakness in the Canadian Economy. However, a low figure is seen as bullish for the CAD; conversely, the rise is seen as negative or bearish for the CAD.

Previous Release

ACTUAL: 8.5 %

DEV: -1.16

CONS: 8.9 %

DATE: 12/04/2020 13:30